Learnings In Finance

A bubble is characterized by rapid rise in asset prices, divorced from its fundamentals or intrinsic value. Many economists believe first recorded bubble happened in the year of 1636-37 in Netherlands. What could be the asset under speculation ? Was it Real estate/Gold/Diamond  at that point of time? No.  Craze for Tulip flowers engulfed the Netherlands starting from Nov 1636. In 3 months, prices sky-rocketed many folds before finally crashing down.  It is said that at the peak of the bubble, some Tulips were traded at price that was greater average house price in Amsterdam at that time. Sir Isaac Newton , the famous scientist , invested in a British company called South sea, which held exclusive rights to trade in South America in 18th Century. Initially he made some gains and exited the stock. But it flared up further and his friends were making a lot of money. It should be a humbling moment for him. So he purchased the stock again at a higher price. After some time the stock

United states of America has political and economic influence all over the world.With 33  crore people out of 759 cr world population(around 5%) its GDP is more than 20% of worlds GDP(Nominal not PPP). US Defence budget a year is almost equal to all other countries defence budgets put together. US spending on health care is more than India's annual GDP. In a Nation's economic well-being  two things play important role. Fiscal policy, Govt decides, deals with how Govt gets its money and spends. Second one is monetary policy, controlled by central bankers.Given the size of economy , policies in US not only affect US, but rest of the world as well, in the globalised world. Federal reserve which controls the monetary policy in US.Alan Greenspan was Fed Chairman for 18 years in US . A raise in interest rate, or a cut, could not only affect US but the entire worlds economy. During Clinton regime , US economy had a robust growth. When there is a good growth, the unemployment rate